The Saeima on Thursday adopted next year’s state budget in its final reading, setting revenues at €16.1 billion and expenditures at €17.9 billion. The budget deficit for next year is projected at 3.3% of gross domestic product (GDP).
A total of 52 MPs voted in favour of the budget, while 42 voted against.
MPs began reviewing the budget in its final reading on Wednesday at 9 a.m., and, with breaks included, spent roughly 24 hours completing the process. As previously agreed, parliament did not examine the budget and its accompanying legislation overnight this year.
In 2024, the Saeima debated the budget and its 19 accompanying laws for nearly three days, spending a total of around 27 hours on the discussions.
The 2023 budget was adopted following an almost 24-hour uninterrupted session, drawing criticism for inefficiency.
Meanwhile, the 2022 budget, adopted remotely via the e-Saeima system during the Covid-19 pandemic, required 51 hours of debate (excluding weekends).
The 2021 budget took even longer—nearly 78 hours—marking the longest budget debate in the Saeima’s history.
While reviewing the 2026 budget, MPs adopted amendments to the Excise Tax Law
that foresee gradual increases in excise tax for several product groups starting next year, including alcoholic beverages, tobacco products, non-alcoholic drinks and energy drinks.
In two years, the reduced excise rate on petroleum products used in freeports and special economic zones will be abolished.
From 15 March next year, excise tax on strong alcohol will rise. From 1 March 2028, excise increases will apply to all alcoholic drinks, raising retail prices by approximately €0.51 for strong alcohol, €0.15–€0.30 for wine, and €0.03 per bottle for beer.
Next year and from 2027, excise taxes on all tobacco products will rise more sharply—5% more than previously planned. Compared to today’s prices, by 2028 a pack of cigarettes will cost €2.20 more, reaching €7.50. Heated tobacco will rise by €0.35 per pack, and e-liquid cartridges (2 ml) by €0.15.
From 2028, excise increases will also apply to sweetened drinks,
and a separate excise rate will be introduced for energy drinks.
MPs also approved several legal amendments to increase support for families with children starting next year.
Under amendments to the State Social Benefits Law, child-care benefits will be paid until the child reaches 1.5 years of age, instead of the current two years. At the same time, the benefit amount will increase from €171 to €298 per month. For children born before 2 November next year, the existing benefit (€42.69 per month) will continue between 1.5 and two years of age.
Changes will also affect the family state benefit for children in education. Families will again receive benefit payments for children aged 16 to 20 who are studying full-time at a college or university and are not married. Currently, the benefit is only available for children studying at secondary or vocational schools.
The one-time childbirth allowance will also increase—from €421.17 to €600.
MPs adopted amendments to the Value Added Tax Law introducing a reduced 12% VAT rate for selected basic food products starting mid-next year.
The reduced 12% VAT will apply to: rye, wheat, mixed-flour and gluten-free bread, including pasteurised or frozen bread with or without additives; polar bread, various bread rolls, buns, burger buns, lavash, tortillas and pita bread;
The reduced rate will not apply to pastries, pies, croissants, confectionery, crispbreads, rusks, toast, breadcrumbs or breadsticks.
The reduced VAT will also apply to fresh, sterilised or pasteurised cow’s, goat’s and sheep’s milk (but not UHT milk, condensed milk or evaporated milk).
A 12% VAT rate will also apply to fresh and chilled poultry meat (chicken, turkey, duck, goose, guinea fowl and quail), including cut, boned, sliced or minced meat and offal — but not to frozen meat.
The same rate will apply to fresh, unprocessed poultry eggs in shells.
The reduced VAT rate will be in force from the 1st of July next year to the 30th of June, 2027.
The Saeima also adopted amendments to nine laws that will gradually reform the current early retirement (service pension) system starting in 2027. The changes aim to create a fairer and more financially sustainable system aligned with society at large. The amendments are tied to the 2026 budget and medium-term framework.
Latvia’s consolidated budget revenues next year are projected at €16.1 billion, while expenditures will reach €17.9 billion. Compared to the 2025 budget, revenues will increase by €944.6 million and expenditures by €804.3 million.
The budget deficit of 3.3% of GDP is driven mainly by significant increases in spending on national defence, security, long-term support for Ukraine and investments in public safety.
The government’s main priorities for 2026 are national security, support for families with children and high-quality education. These areas will receive an additional €693.5 million.
€448.3 million will be allocated for strengthening national defence, internal security and cybersecurity.
€94.8 million will support families with children and improve material support for children in out-of-family care. This includes increases in childbirth and child-care benefits, as well as more support for guardians and adoptive parents.
€45 million will go toward implementing the new teacher remuneration model “Programme at School”, including support staff.
An additional €105.4 million will be directed to other initiatives, including healthcare.
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